but the creation of great central exchange markets with responsibilities for service to the entire people. This help would arise in two ways. The first is the hourly determination of price at great centers that all may know, and thus the farmer protects himself against local variations and manipulation. The second is a system of forward contracts through such a market between farmer and consumer on standardized commodities. Such contracts in effect remove the necessity of a speculative middleman. This system exists in grain and in cotton and in its processes eliminates large part of the hazard and carries the commodity at the lower rate of interest. The present trouble with the system of future contracts is that it lends itself to manipulation, but I believe this could be eliminated.
Take the case of potatoes; here is an unstandardized, seasonal commodity, with no national market and therefore no established daily price as a datum point. A grower in Florida, Maine, or Wisconsin, through a local agent, or through local sale, consigns potatoes to Pittsburgh because a larger price is reported there than in Chicago. The grower can usually make no actual sale to an actual retailer or wholesaler at destination because the buyer has no assurance of quality. Coincident shipment
from many points to a hopeful market almost daily produces a local glut at receiving points somewhere in the country. Often enough the shipper gets no return but a bill for freight and the perishables sometimes rot in the yards. If potatoes were standardized and sold on contract in national market, protected from manipulation, three things should result. First, there would be a daily national price known to growers. Second, by the sale of a contract for delivery the grower would be assured of this price. Third, the contract and directions for shipment would flow naturally to the distributor where the potatoes were needed, and thus the present fearfully wasteful system would be mitigated. Potatoes would be a most difficult case to handle; dried beans, peas, even butter and cheese would be easier. I am not advocating widespread dealing in futures, but short contracts giving time for delivery would probably greatly decrease the margin between farmer and local distributor by saving great wastes in transport, in spoilage and in manipulation.
The second class of speculation is one largely of the war as a period of rising prices growing out of inflation, and so forth. It lies in the marking up of goods on the shelf to the level of the rising daily market. This marking up
has been one of the large factors in increasing the margin during the war. No better example exists than the rise of flour during the 1916-1917 harvest year, referred to elsewhere. We shall have a remedy for this the moment the tide of inflation turns. The farmer and consumer cannot, however, expect that they will get even during such a reverse period for their losses on the rise, because the trades have too great an individual power of resistance against selling goods at a loss. Anyway, the marking up of goods will cease when prices cease to rise—and there is a limit.
The third class of speculation is wholly vicious. That is the purchase of foodstuffs, in times of rising economic levels, sheerly for the rise in price or the deliberate manipulation of markets during normal times. These operations are against the common welfare; they can find no moral or economic justification. They are not to be reached by prosecution; they must be reached by prevention. Our great boards of trade in fine patriotic spirit proved their ability during the war to control deliberate manipulation of grain and other futures.
The two latter types of speculation are an impediment to free markets and they become an unnecessary charge on the margin.
Co-operative Marketing by the Farmer
There can be no question of the improvement in position of both farmer and consumer in cases where coöperative marketing can be organized. The high development of coöperative citrus fruit marketing has resulted in lower average prices to consumer, better quality, and better return to the grower. Here is a case of scientific distribution lamentably absent in many other commodities. There are other specialized products to which it could be well extended. To reach its best development it should have parallel coöperative development among consumers as have we discussed elsewhere.